Ralphs Grocery Co. was indicted Thursday by a federal grand jury on 53 criminal counts that alleged identity theft and claimed the grocer created false Social Security numbers in order to rehire locked-out employees during a lengthy grocery strike that began two years ago.

Ralphs took those steps because of "tacit approval, if not encouragement, by Ralphs' senior management to hire locked-out and striking employees as temporary replacement workers," federal prosecutors allege.

Ralphs denied that the re-hiring of striking employees was part of a corporate plan.

"We acknowledge that about 200 Ralphs employees worked illegally during the strike, and we regret that that happened," said Ralphs spokeswoman Lynn Marmer. "These were the acts of individuals who may have been motivated for humanitarian reasons, but they were violating clear company policy."

She said the managers, who represented less than 1 percent of the company's employees, were disciplined. She declined to elaborate.

Among the charges sought by prosecutors: Using false Social Security numbers, fraudulently creating identities, falsifying facts to the Social Security Administration and the Internal Revenue Service, money laundering, obstructing justice and making false statements to the National Labor Relations Board.

If convicted on all counts, Ralphs faces up to five years of corporate probation and fines totaling upwards of $100 million, federal prosecutors say.

According to prosecutors, Ralphs created false identities in order to rehire locked-out employees so as to avert major financial damage during the strike. The moves were allegedly part of a revenue-sharing agreement Ralphs made with its main competitors, Albertsons Inc. and Safeway-owned the Vons Cos.

Meanwhile, the labor unions that represented the workers were depleted of cash during the strike, which took place from October 2003 through March 2004.

According to prosecutors, Ralphs created fake Social Security Numbers and new names for employees who were rehired after being locked out on Oct. 12, 2003. The company also falsified employment eligibility forms, employee withholding allowance certificates, income tax statements and reports to trust funds that provided employee pension and health benefits. The company also issued thousands of payroll checks under false names and allowed workers to cash their paychecks at Ralphs in order to hide their identities.

Ralphs allegedly forced employees to wear name tags with their new identities and to work far from their normal workplaces, often moving from store to store.

The lockout began after the workers, who were members of seven local unions of the United Food and Commercial Workers Union, had failed to come to an agreement with Ralphs, Albertsons and Vons over a collective bargaining agreement that was about to expire.

About 19,000 grocery clerks and meat cutters at Ralphs' 300 Southern California stores were locked out during the strike, which involved a total of 65,000 to 70,000 grocery workers.

"There was never any question in our minds that Ralphs' hiring of locked-out workers and falsification of names and Social Security numbers was illegal," said Rick Icaza, president of the United Food and Commercial Workers Union Local 770, in an e-mailed statement today. "In falsifying names and Social Security numbers, Ralphs avoided the company's required contributions into the workers' health and pension funds. They must now reimburse those workers they illegally locked out for four and a half months."

If convicted, Ralphs must pay restitution to victims.

The indictments were part of a collective effort by federal prosecutors, the U.S. Department of Labor, the Social Security Administration and the IRS. In December 2003, the NLRB began investigating allegations that Ralphs had rehired the employees with false identities. By January 2004, a federal grand jury had convened to investigate similar allegations. In response, Ralphs refused to provide documents, citing attorney-client privilege, prosecutors say.

Representatives of the company are expected to be arraigned early next year.

Ralphs is a Compton-based division of the Kroger Co., whose shares dropped 17 cents to $18.85 just after the indictment was announced.

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